Entry in the U.S. engine market Challenges and opportunities for European suppliers

Transcription

1 Entry in the U.S. engine market Challenges and opportunities for European suppliers MTU Maintenance Hannover GmbH September 11th 2017 Andrea Luebke (THP)

2 Proprietary Notice This document contains proprietary information of the MTU Aero Engines AG group companies. The document and its contents shall not be copied or disclosed to any third party or used for any purpose other than that for which it is provided, without the prior written agreement of MTU Aero Engines AG. September 11, 2017 Ms. Andrea Luebke 2

3 Agenda 1. Introduction 2. MTU Overview 3. Enter and penetrate a market 4. US Engine market September 11, 2017 Ms. Andrea Luebke 3

4 1. Introduction Ms. Andrea Luebke Vice President Purchasing MRO Born on May 23 rd 1978 in Wernigerode (Harz region) Leuphana University Lueneburg Commerzbank AG interzart AG MTU Maintenance Hannover MTU Aero Engines Munich Master degree in economics Halcyonics GmbH Manager Controlling Assistant to the COO Today MTU Maintenance Hannover MTU Maintenance Berlin MTU Maintenance Hannover MTU Maintenance Hannover VP Purchasing MRO Vice President CF34 Program Director Engine Program Parts Repair September 11, 2017 Ms. Andrea Luebke 4

5 Agenda 1. Introduction 2. MTU Overview 3. Enter and penetrate a market 4. US Engine market September 11, 2017 Ms. Andrea Luebke 5

6 2. MTU Overview MTU Aero Engine s business model Commercial engine business Military engine business Commercial maintenance Share in sales: ~ 50% Balanced portfolio of products in all thrust categories Partnerships with OEMs going back decades Share in sales: ~ 10% European and U.S. engine programs Lead industrial partner to the German Armed Forces Share in sales: ~ 40% Access to high-growth segments Provider of services to airlines worldwide September 11, 2017 Ms. Andrea Luebke 6

7 2. MTU Overview Main company locations worldwide MTU Aero Engines, Headquarters Munich MTU Maintenance Hannover MTU Maintenance Lease Services Aerospace Embedded Solutions MTU Aero Engines Polska MTU Maintenance Canada MTU Maintenance Dallas Ceramic Coating Center MTU AENA Vericor Power Systems MTU Maintenance Zhuhai 50% MTU; 50% China Southern Airfoil Services (ASSB) 50% MTU; 50% LHT OEM business Engine MRO Parts repairs MTU Maintenance Berlin-Brandenburg Pratt & Whitney Canada Customer Service Centre Europe September 11, 2017 Ms. Andrea Luebke 7

8 Agenda 1. Introduction 2. MTU Overview 3. Enter and penetrate a market 4. US Engine market September 11, 2017 Ms. Andrea Luebke 8

9 3. Enter and penetrate a market Key factors for entering a new market Market, competitors, customers Active risk management Organizational structure Financial resources Key Factors for a successful expansion into markets Adaptability to local conditions Personal resources Network September 11, 2017 Ms. Andrea Luebke 9

10 3. Enter and penetrate a market Growth rate commercial aviation Until 2036: Passenger traffic with rate of 4.5% p.a. = Doubling of overall active aircraft fleet worldwide 7,100 billion passenger kilometers in ,000 active aircraft in ,000 billion passenger kilometers in ,000 active aircraft in 2036 Importance to gain/ stabilize market share in EU/ US Growth commercial aviation ASIA > Growth commercial aviation US

11 3. Enter and penetrate a market Oligopolistic market structure in the market of commercial aviation Engine manufacturer Aircraft manufacturer Example: Airbus A320 neo Only configurable with two engine types PW1100G-JM CFMI Leap-1A MRO market foreclosure with long term oriented OEM-MRO-contracts Reduced DER-acceptance for independent MRO s.

12 US Engine Market Background Chart EUR-USD exchange rate (5 years) Price per barrel oil WTI development (5 years) September 11, 2017 Ms. Andrea Luebke 12

13 3. Enter and penetrate a market Fuel Price is just one influence to MRO market Main Drivers Interest rates [%] Fuel price Spare engines ratio New technology US federal funds (eff.) US cents / gallon Retirements (annual) Used parts Fleet age distribution Capacity discipline Industry [ASK] % $1.9bn 2012 $3.0bn* 2022 >20 yrs. Mature markets (EU&NA) Residual value Book value Market value (lease vs. teardown) Production rates Market MRO Parts trader OEM Source: MTU analysis; ICF SH&E; US Federal Reserve; US Energy Information Administration; IATA; *constant prices

14 Agenda 1. Introduction 2. MTU Overview 3. Enter and penetrate a market 4. US Engine market September 11, 2017 Ms. Andrea Luebke 14

15 4. US engine market Challenges: main sources of export control regulations National Governmental Regulations European Regulations US Regulations Defense Products Dual Use Specific Restrictions Specific National Sanctions and Restrictions Dual Use Goods European Embargoes and restrictions EAR (Dual Use Goods) Export Administration Regulations ITAR (Defense Goods) International Traffic in Arms Regulations Sanctions and Embargoes UN Embargoes Source: Mr. Alexander Groba, September 11, 2017 Ms. Andrea Luebke HEAD OF MTU EXPORT CONTROL 15

16 Services MTU Maintenance Hannover 4. US engine market Challenges: item classification Military Items Dual Use Items Hardware (Any tangible article, material or supply except technology and software) Software (Any intangible collection of one or more programs/ microprograms, that are not publically available) Missiles Freighter Aircraft Military Helicopters Command, Control & Communication (C3I) Software Civil Helicopters Commercial Turbines Encryption Software Technology (Specific intangible information necessary for development, production or use of a product, that are not fundamental research or publically available technical technology (certain technical assistance/ related services may also be controlled) Know-how how to build a Military Turbine Know-how how to build a Commercial Turbine Technology controls cover the whole life cycle of a product Source: Mr. Alexander Groba, September 11, 2017 Ms. Andrea Luebke HEAD OF MTU EXPORT CONTROL 16

17 4. US engine market Importance of US Export Compliance Violation of Requirements may lead to Fines Consent agreements Appointment of external compliance officer by the US Government Massive delays in deliveries!!! So why do we focus on the US market???? Source: Mr. Alexander Groba, September 11, 2017 Ms. Andrea Luebke HEAD OF MTU EXPORT CONTROL 17

18 4. US engine market OEM s mostly located in the USA know how and externalities 6% Others 32% 39% Revenue in the commercial engine business in 2016: 2.4 billion 23% IAE shareholders: 25.00% Pratt & Whitney (USA) 24.50% Pratt & Whitney Aero Engines International GmbH (Switzerland) 25.25% MTU Aero Engines (Germany) 25.25% Japanese Aero Engine Corporation (Japan) September 11, 2017 Ms. Andrea Luebke 18

19 4. US engine market Opportunities Majority of OEM s and suppliers are headquartered in the US September 11, 2017 Ms. Andrea Luebke 19

20 4. US engine market Challenges: two different regulation types Tightly controlled regulations for exporting hardware, software and technology US export control Related to military exports Related to civil exports International Traffic in Arms Regulations (ITAR) Export Administration Regulations (EAR) MTU approach: several US Export Compliance Workshops (MTU) for everyone in touch with US exports September 11, 2017 Ms. Andrea Luebke 20

21 THANKS FOR YOUR ATTENTION September 11, 2017 Ms. Andrea Luebke 21

22 BACKUP September 11, 2017 Ms. Andrea Luebke 22

23 4. US engine market Major players in the engine market mostly located in the USA! OEMs Engine subsystem suppliers Engine component suppliers Material suppliers September 11, 2017 Ms. Andrea Luebke 23

24 4. US engine market Conclusion Aviation market: growth rate and structure in US Research (market, competitors, customers) Surplus to invest Financial resources Professional workforce Personal resources Part of business culture Active risk management Key Factors for a successful expansion into foreign markets Established flexibility Organizational structure Experience + flexibility Adaptability to local conditions Suppliers + OEM s mostly from US Network September 11, 2017 Ms. Andrea Luebke 24

25 MTU s history BMW Flugmotorenbau GmbH is founded 1945 BMW Siemens & Halske Daimler Benz 1957 BMW Triebwerkbau 1965 MAN takes over BMW Triebwerkbau 1989 MTU becomes an affiliate of Deutsche Aerospace, later renamed DaimlerChrysler Aerospace (DASA) 1969 MTU 50% Daimler Benz 50% MAN 2005 MTU goes public 2000 MTU becomes a directly managed DaimlerChrysler company Today Shareholder structure: 91% Institutional investors 7% Private shareholders 2% MTU-owned shares September 11, 2017 Ms. Andrea Luebke 25

26 Organizational Chart MTU Reiner Winkler CEO Michael Schreyoegg Chief Program Officer Dr. Rainer Martens Chief Operating Officer Holger Sindemann MRO Operations Andrea Luebke VP Purchasing MRO September 11, 2017 Ms. Andrea Luebke 26

27 Portfolio Development MTU Engine MRO One program/year since : PW1100G-JM LARGE SMALL IGT CF6-50 LM2500 LM5000 PW2000 RB211-22B# RB # V2500-A1 CF6-80C2 PT6A JT15D# LM6000 V2500-A5/D5 JT8D# * according to OEM definition (excl. Genx/GP7000 module MRO) # program stopped later in time September 11, 2017 Ms. Andrea Luebke 27 PW300 ASE# CFM56-3 CFM56-7 PW200 CF34-3 CFM56-5B PW500 CF34-8 CF34-10 PW6000 GE90G GP7000 LPT CFM56-2 Genx TCF PW1100G-JM

28 Commercial maintenance the key products Large commercial engines V2500 CFM56 series CF6 series GE90 series PW2000 Small commercial engines CF34 series PW200/300/500 Industrial gas turbines LM2500/2500+ LM5000 LM6000 Services solutions Aircraft on-ground/ on-wing services Leasing Spare engines Repair procedures September 11, 2017 Ms. Andrea Luebke 28

29 Major players in the commercial maintenance market MTU is among the TOP 5 maintenance providers for commercial engines. Source: ACAS December 2014 active engines under contract, commercial aircraft excluding turboprops and business jets September 11, 2017 Ms. Andrea Luebke 29

30 Commercial engine business The new geared turbofan generation went into revenue service in 2016: Fuel burn and CO 2 emission reduced by 16%, noise cut in half Growth across all market segments: Ten development programs running at the same time Balanced portfolio: From business jet to widebody aircraft September 11, 2017 Ms. Andrea Luebke 30

31 Key commercial engine programs Pounds (thrust) 100,000 80,000 60,000 40,000 20,000 Cessna Bravo Falcon Gulfstream 7X G500 Airbus A320neo Airbus A320 Boeing 757 Airbus A300/ A330 Boeing 787 Airbus A380 Boeing 777 Boeing 777x September 11, 2017 Ms. Andrea Luebke 31

32 Military engine business European cooperation partner and transatlantic systems company Cooperation partner to the Federal Armed Forces in Germany in all key military engine programs Partner for U.S. military programs September 11, 2017 Ms. Andrea Luebke 32

33 Key military engines Panavia Tornado Eurofighter Typhoon Transall A400M Tiger Sikorsky CH-53 Boeing C-17 CH-53K F/A-18E/F/ EA-18G Boeing F September 11, 2017 Ms. Andrea Luebke 33

34 Commercial maintenance Market success: Customer base of 150 airlines worldwide Contract volume: Over 7 billion U.S. dollars Number of shop visits: More than 17,000 engines repaired and overhauled worldwide September 11, 2017 Ms. Andrea Luebke 34